At Funding Circle we want to help you earn attractive, stable returns by lending to small businesses across the UK. Of course, one of the key aspects of achieving this is having a robust methodology to carefully assess the businesses you’ll be lending too. To give you a bit more insight into how this process works, we caught up with Henry, Fay and Edward in the Credit Assessment team to ask about their role at Funding Circle.
First, can you tell us where your team sits in the overall funding process?
Henry – When a business applies for a loan online, there are several checks that happen automatically. For example we pull information from Companies House to check how old the business is, and we’ll run credit checks with credit bureaus like Experian. Some businesses will not meet our criteria straightaway, the rest will pass onto a full assessment.
To assess an application, our Loan Analyst team will collect all the information we need. This includes their full credit report, business bank account data, details on the business shareholders and financial accounts with profit and loss information. They’ll then use our bespoke internal risk models to give a risk grade to each business.
They then pass that information on to us. We look at their application, their credit score, other external data sources and all the other information available to us. We then use our internal credit criteria to decide whether we can make them an offer.
When it comes to making a decision, what do you factor in?
Edward – There are hundreds of data points that go into every assessment. Naturally key factors include the financial health of the business, their debt history, and how much they can afford to pay back each month.
It’s also important that they are asking for money for the right reasons. We support a wide variety of loan purposes, but there are some that we don’t support.
Fay – It’s not always about approve or decline, we take a holistic view of the business. We look at the potential risks. We want to give a quick decision to business owners, but not at the expense of carrying out a serious assessment. All cases get looked at with due diligence, if it’s more complex and takes more time, that’s what we’ll do.
You mentioned that you use internal models, how are these created?
Fay – Our Risk team uses huge amounts of data and cutting-edge techniques to develop our assessment models. They are constantly updating them too, feeding in more data, adapting to wider economic conditions and so on.
We sit right in the middle of investors and the businesses they lend to. We want to help investors get the best returns possible, and, if they meet our criteria, help small businesses get finance at a price that’s fair to them. Our risk models help strike that balance.
Henry – The way I see it, the Risk team are like the FA and we’re the referees – they set out the rules, we apply them.
How much experience does the team have?
Fay – Across the assessment teams we have decades of experience from a wide variety of financial institutions. For example I was previously at another fintech company and before that was in asset finance for 5 years.
Henry – I joined Funding Circle 5 years ago and have worked my way up in the Credit Assessment team.
Edward – I’ve previously worked at Deloitte in corporate tax and at a payments company. We all chip in and help each other too, especially with the more complex cases. There’s tonnes of experience in the team we can all draw on.
Do you have any other responsibilities?
Fay – Obviously our main role is assessing loan applications, but we also run or support other projects to help us improve or adapt to external changes. I worked on a project
regarding the legislation around Company House, how it was changing and how that would impact our process.
Edward – I look at how the team operates, what are our strengths and where we can improve.
Henry – I attend meetings with our brokers. We have long-standing relationships with many of them, and I join to answer any questions so they can refer the right businesses to us.
What’s the culture like on the team?
Henry – We have a really open working environment, no one is tucked away in an office. If we have questions or need help, we have many people from different backgrounds, different experience levels and different areas of expertise, and there’s an attitude where everyone knows they can get advice when they need it.
Edward – There’s openness and respect too. A new joiner is happy to go and ask someone with 20 years experience because they want you to learn.
Fay – We’ve got a really well mixed team. There’s people who have been through the Funding Circle journey and have worked their way up, and there’s people that have joined from different backgrounds. We’re not afraid to share our different perspectives.
Edward – Breakfast is important too – we all go for toast together in the morning.
Fay – I get in trouble sometimes because I go earlier…
How does it feel to work for a company that’s helping businesses and investors?
Edward: It’s really cool. I saw a shop the other day and I thought ‘Aha, I know that business!’ because they had been a customer of ours. You can see the difference you’re making. When working at some other businesses, customers are just treated like numbers on a system.
Fay: With Funding Circle we’re having a wider impact for small businesses and we’re filling that gap in the market for investments. It’s really rewarding.
That’s amazing, thank you for taking the time to speak to us!